Year in Review 2011

year in Review 2011 Institute for 21st Century Energy | U.S. Chamber of Commerce

www.energyxxi.org

A MESSAGE FROM THOMAS J. DONOHUE “The U.S. Chamber’s Institute for 21st Century Energy is a pioneer in advancing common sense policies that will create jobs and enhance our energy security. Its platform is simple: responsibly unleash all of America’s vast energy resources to create millions of jobs, improve our economy, and make the United States a global energy leader. With your continued support, the Institute will remain the nation’s premier organization in devising and implementing smart strategies to make energy a powerful engine of growth, jobs, and security.”

Thomas J. Donohue

President and CEO

U.S. Chamber of Commerce

OUR MISSION The mission of the U.S. Chamber of Commerce’s Institute for 21st Century Energy is to unify policymakers, regulators, business leaders, and the American public behind a common sense energy strategy to help keep America secure, prosperous, and clean. Through policy development, education, and advocacy, the Institute is building support for meaningful energy action at the local, state, national, and international levels.

The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.

A MESSAGE FROM THE PRESIDENT AND CEO I am pleased to present an overview of the Institute for 21st Century Energy’s activities in 2011. As the Energy Institute has grown, so has our impact on the nation’s energy debate. We’ve been able to continue to expand our reach across the nation and cement our place as an organization that is uniquely positioned to give voice to the thousands of businesses, small and large, that are impacted by the lack of progress being made in Washington on energy.

In 2011, the Energy Institute was engaged in major legislative, regulatory and judicial battles related to the limitation to drilling in the Gulf of Mexico and Alaska; the construction of the Keystone XL pipeline; the growing potential of shale oil and gas; and, the impact of EPA’s proposed regulations on our electricity reliability, among others. Through the Chamber’s legal arm, the National Chamber Litigation Center, the Institute ventured into the courtroom again eleven times to stand up for consumers. Of the 7 cases decided in 2011, the Institute’s position prevailed in five of them.

The Energy Institute continues to bring facts and insightful analysis to polarized debates. We released the second annual Energy Security Risk Index, featuring a multitude of improvements since the inaugural Index in 2010. The Energy Security Risk Index remains the only tool available to quantify America’s energy security. We also launched the Partnership to Fuel America, a new platform focused on emphasizing the growing opportunities for energy that exist between the U.S. and Canada.

With the U.S. Chamber’s unparalleled network across the nation, the Energy Institute’s reach can be felt in all 50 states. We travelled hundreds of thousands of miles to educate and mobilize over 20,000 members of the business community to join our cause. Our advocates generated over 90,000 letters to Congress and over 10,000 letters to President Obama in support of pro-energy positions on issues such as the Keystone XL pipeline and EPA regulations.

The business community, consumers and the media continue to turn to us for information and commentary. Our internet traffic rose nearly 60% over the last year with unique visitors from every state and 120 nations, and we significantly expanded our social media efforts. More than 200 media outlets reaching over 2 million people included us in their reporting in 2011.

This year, we’ll be building on our success by ensuring that energy is at the forefront of the public debate during this critical election year. We will continue to expand the Partnership to Fuel America, and will be undertaking similar efforts to engage the business community on other critical issues. In particular, the Energy Institute will be educating business and opinion leaders about the enormous potential of shale oil and gas.

Thank you for your support of our activities, and we look forward to your continued involvement in our effort to advance a common sense energy policy in America.

Sincerely,

Karen Alderman Harbert

The Foundation The Institute for 21st Century Energy was founded on the principle that energy is vital to our national and economic security. In 2008, the Energy Institute unveiled a policy platform of nearly 90 measurable energy and enviromental recommendations for the new Administration and Congress. Over the past two years, dozens of these recommendations have been introduced in bills pending before the U.S. Congress or acted upon by the Administration. These key policy principles continue to inspire new activities and thought leadership and further validate the Energy Institute’s mandate in Washington and around the country.

Table of Contents Promoting a Pro-Growth Energy Platform..................................................... 3 Building a Bridge Between the States and Washington.................... 11 Demonstrating National and International Thought Leadership......................................................................................................... 19 Expanding Our Reach.................................................................................................... 25

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1 Promoting a Pro-Growth Energy Platform

Energy Institute Policy Platform d Aggressively Promote

Energy Efficiency

d Immediately Expand Domestic

Oil and Gas Exploration and Production

d Commit to and Expand

Nuclear Energy Use

d Commit to the Use

of Clean Coal

d Increase Renewable

Sources of Electricity

d Transform our Transportation

Sector

d Modernize and Protect U.S.

Energy Infrastructure

d Address Critical Shortages of

Qualified Energy Professionals

d Reduce Overly Burdensome

Regulations and Opportunities for Frivolous Litigation

In 2011, we were engaged in major policy discussions including the construction of the proposed Keystone XL pipeline, the growing potential of shale oil and gas, the impact of EPA’s proposed regulations on our electricity reliability, and many others.

d Reduce the Environmental

Impact of Energy Consumption and Production

d Invest in Climate Science to

Guide Energy, Economic, and Environmental Policy

Significantly Increase Research, Development, Demonstration, and Deployment of Advanced Clean Energy Technologies

d

d Demonstrate Global

Leadership on Energy Security and Climate Change

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The Energy Institute advocates for sound, common sense energy policies that will create jobs and make America more secure.

The energy debate in Washington once again took place against a backdrop of a nation struggling with high levels of unemployment. To start 2011, we proposed a Five Point Plan of achievable items that could gain bipartisan support in the new Congress.

Despite the need for good jobs, energy projects were unable to gain traction with the Administration, which restricted access to future offshore exploration and sought to delay a decision on the Keystone XL permit.

For that reason, the Energy Institute continued to highlight the potential of energy as not just a component of our recovery, but the foundation upon which our economy could be built.

Together with policymakers and thought leaders, we demonstrated the ways in which our pro-growth energy platform will benefit our nation.

While the Energy Institute’s basic platform remains central to our mission, we recognized that the election of a new Congress meant new priorities and opportunities for action on key energy policies.

As a result, we presented a five point plan of achievable items that Congress could accomplish. In recognition of the growing concern about the deficit, these items can be accomplished at minimal cost.

Five Point Plan

3 Maximize America’s

own energy resources

3 Make new and clean

energy technologies more affordable

3 Eliminate regulatory

barriers derailing energy projects

3 Do not put America’s

existing energy sources out of business

3 Encourage free

and fair trade of energy resources and technologies globally Christopher Guith and Karen Harbert respond to reporters inquiries at the Five Point Plan roll-out on February 1.

YEAR IN REVIEW 2011 // 5

The Energy Institute regularly convenes policy and thought leaders to discuss important energy topics.

For instance, in February, the Institute hosted a roundtable on shale gas regulation. Congressman Gene Green of Texas, Congressman Tim Murphy of Pennsylvania, and FERC Commissioner Mark Spitzer led the discussion. Also in attendance were many public utility commissioners and stakeholders who work on the ground on shale issues, including Robert Powelson, chairman of the Pennsylvania Public Utility Commission, and Katie Klaber, president and executive director of the Marcellus Shale Coalition.

Karen Harbert discusses shale gas policy with Robert Powelson, chairman of the Pennsylvania Public Utility Commission, and Katie Klaber, president and executive director of the Marcellus Shale Coalition.

Karen Harbert moderated the Institute’s Roundtable Discussion on Shale Gas Policy and Regulation.

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Energy Institute leaders are often called upon to give expert testimony at Congressional hearings.

In 2011, Energy Institute officials appeared before panels in the House of Representatives and the United States Senate.

Christopher Guith testifies before the Senate Energy and Natural Resources Committee.

We have an abundance of resources, but from its earliest days, the Obama Administration has continually been taking land and coastal areas off the table for oil and gas production by canceling onshore leases, imposing a moratorium on exploration and production in the Gulf of Mexico, and proposing a leasing plan that prevents us from developing more resources for the next five years.”

~ Karen Harbert, 3/31/11

House Committee on Natural Resources – Hearing on Gasoline Prices

The label ‘clean energy’ is not reserved solely for renewables, but must be accurately applied to any and all new technologies and processes that reduce environmental impact, whether it be clean coal, advanced biofuels, natural gas vehicles, advanced nuclear or energy storage, among others.”

~ Christopher Guith, 5/3/11 Senate Energy and Natural Resources Committee – Hearing on Clean

Energy Technologies

The National Ocean Policy is the most significant issue affecting energy security, job creation, and economic growth that no one has heard about. Offshore and onshore energy operations, as well as agriculture, manufacturing and construction are all vulnerable to new regulatory actions.”

~ Christopher Guith, 10/4/11 House Natural Resources Committee – Hearing on Onshore and

Offshore Land Use

YEAR IN REVIEW 2011 // 7

in focus: Utility MACT

As the Obama Administration’s EPA continued its march toward overregulation, the Energy Institute responded with a campaign against the proposed “Utility MACT” regulations.

The Energy Institute was the leader of a large group of business organizations that argued that industry needs more time to comply with strict standards. The EPA’s rule threatens America’s electricity reliability and could cost consumers millions, which is why the Energy Institute launched an aggressive advertising campaign and mobilized the Chamber’s grassroots network to oppose it.

Television advertisements on national networks, December 2011.

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in focus: Utility MACT

Don’t Let the EPA Turn Out the Lights on the American Economy EPA is finalizing the most expensive rule in its history. Known as Utility MACT, it could threaten America’s energy supply, cost jobs, and raise energy prices on businesses, manufacturers, and families if it is implemented too fast.

Twenty-five states, organized labor, manufacturers, and businesses from across the country are seeking additional time for power plants to comply with this expensive new rule.

Tell President Obama—America needs more time to get the job done right, not more lost jobs.

Print advertisement in national publications, December 2011.

YEAR IN REVIEW 2011 // 9

The Energy Institute was proud to co-host two energy leaders as part of the ongoing National Chamber Foundation CEO Leadership Series.

In April, we heard from Thomas Fanning, president and CEO of Southern Company. In July, Shell Oil Company president Marvin Odum joined us. Both addressed large crowds in the Chamber’s Hall of Flags.

...the decisions we make around energy use will define whether we will face a period of extraordinary opportunity for policy-makers, businesses like ours and for society at large.”

- Tom Fanning President and CEO of Southern Company

…there are two major elements that make up a sensible national energy policy. First, we need all the arrows in the quiver – a full portfolio of energy resources – nuclear, 21st Century coal, natural gas, renewables and energy efficiency.”

- Marvin Odum President of Shell Oil Company

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2

Chapter

Building a Bridge Between the States and Washington

With the U.S. Chamber’s unparalleled network across the nation, the Energy Institute’s reach can be felt in all 50 states.

In 2011, the Energy Institute logged hundreds of thousands of miles to educate and mobilize the business community to join its cause.

Due to gridlock in Washington, some of the best opportunities for progress exist outside the Beltway. As a testament to the Institute’s growing network in the states, Alaska Governor Sean Parnell chose the Chamber and the Energy Institute as the host of a major announcement from his state designed to boost energy production.

And CEO Karen Harbert collaborated with some of the nation’s top governors to tackle our country’s growing energy challenges.

Mike Catanzaro, energy policy advisor to House Speaker John Boehner, previews 2012 energy legislation at the December Leadership Council meeting.

Karen Harbert delivers remarks at the Chamber’s Regional Government Affairs meeting in Chicago.

Dr. Arun Majumdar, Director, Advanced Research Projects Agency – Energy, speaks at an Energy Institute roundtable event.

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Karen Harbert, Shariq Yosufzai of Chevron Corporation and Ralph Cavanagh of National Resources Defense Council discuss energy security in San Francisco.

Karen Harbert addresses the American Association of Petroleum Geologists in Houston.

Karen Harbert discusses U.S. offshore oil exploration at an event hosted

by Rice University.

YEAR IN REVIEW 2011 // 13

Building a bridge between the States and Washington Jackson Hole, WY Discussed energy issues with Governors Matt Mead of Wyoming and Haley Barbour of Mississippi.

Bismarck, ND Billings, MT

San Francisco, CA Addressed the World Affairs Council of San Francisco.

Gilette, WY Rapid City, SD

Phoenix, AZ Delivered remarks at the 14th annual Energy, Utility & Environment Conference.

Lincoln, NE Denver, CO

Grand Grand Junction Junction Colorado Colorado Springs, Springs, CO CO Las Las Vegas, Vegas, NV NV BakersďŹ eld, BakersďŹ eld, CA CA

Houston, TX Discussed offshore oil exploration at Rice University.

Los Angeles, CA Spoke at the Milken Institute Global Conference.

Anchorage, AK Gave the keynote address at an Anchorage Chamber of Commerce event.

14 INSTITUTE FOR 21ST CENTURY Institute for 21st CenturyENERGY Energy 14////

Lansing, MI Delivered the keynote address at an event hosted by the Mackinac Center for Public Policy.

Washington, DC Minneapolis, MN

Hosted a roundtable discussion with Joe Oliver, Canada's Minister of Natural Resources.

De Pere, WI

Madison, WI

Midland, MI Kalamazoo, MI Pittsburgh, Pittsburgh, PA PA

Omaha, NE

Philadelphia, Philadelphia, PA PA

Columbus, Columbus, OH OH Indianapolis, IN Indianapolis, IN Arlington, Arlington, VA VA

Kansas Kansas City, City, MO MO

Williamsburg, VA

Chicago, IL

Louisville, Louisville, KY KY

Participated in an event hosted by the Canada-U.S. Business Council.

Charlotte, NC

Atlanta, Atlanta, GA GA

Dallas, TX

Chattanooga, TN Joined Senator Bob Corker for a roundtable discussion on electricity and economic development

Ft. Lauderdale, FL Delivered remarks to the National Electrical Contractors Association.

Palm Palm Beach, Beach, FL FL

New Orleans, LA Addressed the National Defense Industrial Association's Environment, Energy Security and Sustainability Symposium.

LEGEND 2011 Energy Institute Event

YEAR REVIEW 2011 Year in IN Review 2011 // // 1515

in focus: Partnership to Fuel America

The Partnership to Fuel America (PFA) was launched in 2011 to emphasize the growing opportunities for energy that exist between the U.S. and Canada.

While the Partnership will be focused on long term opportunities, the initial focus was on the construction of the proposed Keystone XL pipeline. The Partnership has quickly grown to include members in 12 states, mostly from the Midwest, where the greatest impact from Canadian energy development will be felt. In particular, pfa recruited and built local supporters in the states closest to the Keystone XL pipeline, and played a role in a significant turnout from the business community at the State Department’s public hearings on Keystone held along the pipeline route. Our partners include local and mediumsized businesses and business organizations. Many of the individuals that have attended Partnership events are leaders in their communities and are helping to educate other business leaders and citizens.

Partnership to Fuel America advertisement, December 2011.

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in focus: Partnership to Fuel America

The Partnership to Fuel America has quickly grown to include members in 12 states.

PFA member John Meyer of Winner, SD, testifies about the benefits of Keystone XL pipeline at a Senate Health, Education, Labor and Pensions committee hearing on December 8.

John McCollister of the Platte Institute testifies on behalf of PFA at the State Department’s Keystone XL hearing in Atkinston, NE.

Larry Tveit, former Montana state senator, gives a preview of his testimony in support of the Keystone XL pipeline at a State Department hearing in Montana.

YEAR IN REVIEW 2011 // 17

in focus: Partnership to Fuel America

The Energy Institute spread our message about the Keystone XL pipeline in print ads, email communications and action alerts.

Initiative of the U.S. Chamber of Commerce Institute for 21st Century Energy

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Keystone XL is a $7 billion pipeline expansion project that will connect a secure and growing supply of Canadian crude oil – Canada developed from both traditional deposits and oil sands – with the largest refining centers in the United States.

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WHO WE ARE Initiative of the U.S. Chamber of Commerce Institute for 21st Century Energy

the U.S. Chamb

The Benefits of the Keystone XL Pipeline Project

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WHAT WE BEL

The Truth About North American Energy America needs more energy resources, including oil and natural gas, to fuel its economy and provide consumers with affordable supplies of fuel.

• America will require 21% more energy in 2035 than in 2009, according to the U.S. government.

• According to federal government forecasts, oil and natural gas will continue to fuel more than half of America’s consumer energy needs for decades, even as alternative energy sources continue to develop.

Our nation needs more fuel supplies from stable and reliable sources to meet ever-growing energy demands. Due to increased worldwide demand, global competition for energy is increasing.

Development of additional supplies of North American energy will create and preserve tens of thousands of jobs and generate much needed tax revenue and spur regional and national economic growth. It would also help curb our dependency on crude oil from other countries, some of whom are unstable or unfriendly to U.S. interests.

CANAdA As A NEighbor ANd A rEsourCE

Canadian oil and energy resources are an abundant energy source; they can help fuel our growing energy needs, stimulate our economy, and make our country more energy secure.

• Canada has the third largest oil reserves in the world, with over 175 billion barrels of recoverable oil within its borders.

• The United States imports more oil from Canada than any other nation, providing the U.S. with 1.9 million barrels of oil a day.

• Canada sends more than 99% of its oil exports to the United States, and about half of the Canadian crude oil brought into this country is derived from oil sands.

• Production from Canadian oil sands could rise from about 1.4 million barrels per day in 2010 to about 3.5 million barrels per day by 2025.

WHAT ARE

Strengthening U.S. Energy Security Spurring U.S. Economic Growth

WHY WE ARE

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According to a 2011 study (CERI), oil sands development is expected to lead to the creation or preservation of more than 444,000 new U.S. jobs between 2011 and 2035, and add an estimated $521 billion to U.S. gross domestic product during that same period. Oil companies are investing billions of dollars in pipeline projects and in expansions and upgrades to refineries throughout the U.S. to make motor fuels and other products from Canadian oil sands crude. .

For more information about North American Energy, please visit www.FuelingUS.org.

Initiative of the U.S. Chamber of Commerce Institute for 21st Century Energy

Overview of the Keystone XL Pipeline WHAT IS KEYSTONE XL?

The proposed TransCanada Keystone XL Pipeline provides the United States with the opportunity to access safe, reliable, and affordable energy supplies from Canada, and reduce our need to import crude oil from less stable countries and regions of the world.

Keystone XL is a $7 billion expansion project that will connect a secure and growing supply of Canadian crude oil –developed from both traditional deposits and oil sands – with the largest refining centers in the United States.

The existing 1,661-mile Keystone Pipeline system became operational in June 2010. It has the ability to transport approximately 591,000 barrels of crude oil daily, non-stop from Alberta, Canada to market hubs in the Midwest and Texas. According to TransCanada, the Keystone XL Pipeline expansion will increase capacity of the Keystone system to approximately 1.1 million barrels of crude oil per day by 2013.

In addition to improving the nation’s economic and energy security, the proposed project will provide approximately twenty thousand badly needed manufacturing and construction jobs, and contribute an estimated $20 billion in benefits to the U.S. economy.

It’s Time to Score a Touchdown for American Jobs

PIPELINE SAFETY

The Keystone XL Gulf Coast Pipeline project will be the newest, strongest and most advanced pipeline in operation in North America, using the best materials and highly innovative technology.

Pipelines are the safest and often most efficient way to transport crude oil and petroleum products; for comparison, it would take a train 25 miles long to transport the same amount of oil that Keystone XL will move each day. Each year, hundreds of millions of gallons of crude oil and petroleum products are safely transported on thousands of miles of pipeline in the U.S. The vast majority of pipeline leaks are small, with most incidents involving less than three barrels.

OIL SANDS

Canada has the third largest oil reserves in the world, with over 175 billion known barrels of recoverable oil. Much of the Canadian crude is located in geologic formations called oil sands. According to a 2011 study (CERI), American jobs supported by Canadian oil sands development could grow from 21,000 to 465,000 by 2035. Oil sands are a mixture of sand, water, clay, and a form of oil called “bitumen.” The entire oil sands deposits of western Alberta lie under the land equivalent of the size of Florida (54,000 square miles).

Oil sands are extracted from the ground either through mining, or increasingly by a method called “in situ,” a process that injects steam into the ground to heat the oil sand, reducing the thickness of the bitumen and bringing the fluid to the surface, while leaving the sand in place.

For more information about the Keystone XL Pipeline, please visit www.FuelingUS.org.

T

he Keystone XL Pipeline is a touchdown for the American economy.

This shovel-ready project will employ thousands and generate millions in new investments and tax revenue.

With unemployment on the rise and the American economy on shaky ground, the Keystone XL Pipeline project will get tens of thousands of Americans back to work over the long term—and provide our nation with a secure supply of reliable and affordable energy from our trusted ally Canada.

www.fuelingus.org

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3

Chapter

DEMONSTRATING NATIONAL AND INTERNATIONAL THOUGHT LEADERSHIP

A major component of the Energy Institute’s mission is to educate the public and the business community about energy issues facing the nation.

In 2011 the Energy Institute continued its tradition of providing timely and insightful analysis, through print reports, expert testimony provided to Congress, and in support of litigation when necessary.

China’s Quest for Energy 8

Institute for 21st Century Energy

China’s domestic market demand and are beginning to export their large-scale products. The largest Chinese wind turbine manufacturers—such as Sinovel, Goldwind, XEMC, Shanghai Electric Group, and Mingyang—are developing larger turbines to compete in the global market for large-scale wind power equipment. In 2009, Sinovel, Sewind, and Goldwind exported 20 large-capacity complete wind turbine sets to India, the United States, the United Kingdom, and Thailand. Although Chinese wind turbine exports are rising, a major concern is the quality of the product.24

13 projects to $88.2 billion in 81 projects (Figure 8 and Table 11).27 During 2005–10, OFDI totaled $318.9 billion, invested in 283 projects in 82 countries. The two largest destinations for all categories of Chinese OFDI are Australia ($34 billion in 31 projects) and the United States ($28 billion in 32 projects).

Figure 8. Chinese Foreign Direct Investment, 2005–1028

China is a strategic producer and consumer of rare-earth metals, a group of 17 elements that are used in high-tech and clean energy applications. China exported 39,813 metric tons of these materials in 2010. It controls more than 90% of the current global supply and sets limits on its exports. The materials are used in windmills, hybrid automobiles, and critical components in sensitive military applications like missile guidance systems. Concerned with China’s growing control over rare-earth supplies and its plans for a stockpile, Japan, South Korea, and the United Kingdom are also considering building strategic stockpiles. And in the United States, some lawmakers are discussing legislation to require the government to build a strategic reserve.25

All FDI Energy, Power

70,000 60,000 50,000 40,000 30,000 20,000 10,000 0

2005

2006

2007

2008

2009

2010

Institute for 21st Century Energy | U.S. Chamber of Commerce

Although rising exponentially, China’s OFDI stock accounts for less than 10% of global FDI, which is far below the country’s share of world trade and GDP. With massive foreign-exchange reserves of more than $2.5 trillion, current account surplus, and no credit crunch, China is therefore expected to continue to invest in large projects overseas.

Outward Foreign Direct Investment Is Concentrated in Energy

China needs to secure natural resources to fuel rapid economic growth. Consequently, China’s aggressive domestic investment in energy and power has boosted its OFDI in energy and power projects. Chinese OFDI in the energy and power sector increased by 772% from $6.5 billion in 2005 to $56.7 billion in 2010. During the period 17 between 2005 and 2010, accumulated OFDI in the energy and power sector amounted to $152.2 billion in 109 projects in 42 countries and accounted for nearly 48% of total FDI in 2010 (Table 11).

As noted earlier, China’s concern about energy security has pushed it to ensure adequate and secure supplies through its OFDI and other measures. Starting from virtually no OFDI in 1980, China has rapidly become an important source of OFDI since the adoption of the “go global” policy in the past 10 years. While global OFDI flows declined by half from its peak in 2007 due to the global financial crisis, China’s nearly doubled from its 2007 level.26

China’s Quest for Energy

90,000 80,000

Table 12. Top 10 Destinations for Chinese OFDI in Energy 2005–10 Even more impressive, China and OFDIPower, grew more than49 nine times between 2005 and 2010, from $9.6 billion in Country

Amount (in millions of dollars)

Iran

$15,010

Nigeria

$12,670

Brazil

$11,400

Kazakhstan

24 25 26

Association, Global Wind Energy Council, October 2010.

6 T., 2010, “China Moves to$2,502 Areddy, James Strengthen Grip Over Supply of Rare-Earth Metals, 3 ” The Wall Street Journal. $4,223

8.3%

$2,413

6.3%

$8,360

10

$836

5.5%

$8,020

3

$2,673

5.2%

Canada

$7,860

5

$1,572

5.1%

1

$7,200

5

$1,126

Vietnam United States Top 10 All Countries

4

$7,200 $5,630 $5,400

2010 are energy ($43.1 billion), power ($13.8 billion), transportation ($10.1 billion), metals ($8.4 billion), real estate ($9.6 billion), finance ($3.2 billion), agriculture ($2.5 billion), industry ($1.9 billion), and technology ($1.1 billion).

9.8%

UNCTAD, 2011, Trends in 2010,” UNCTAD Global 7.5% 4 “Global and Regional FDI $2,850 Investment Trends Monitor.

Australia Argentina Switzerland

$9,650

Number of Energy Average Amount per As percentage of All Project (in Energy Industry 27 Four industries in 2005 are energy ($6.6 billion), metals ($2.2 billion), Chinaand WindPower Power Outlook 2010, Chinese Renewable Countries industry ($500 million), and transportation ($350 million); 9 industries in Projects millions of dollars)

28

Scissors, Derek, 2011, “China Global Investment Tracker: 2011,” The Heritage Foundation.

www.energyxxi.org

4.7% 3.7%

6

$900

$91,200

47

$1,940

59.7%

$152,790

109

$1,402

100.0%

3.5%

Table 13. Top 10 Chinese Foreign Investment Projects, 2010

50

Investor China State Construction Engineering

Amount ($ millions) $8,000

Ownership (%)

Partner/Target

Sector

25

Nigeria National Petroleum

Energy

Repsol

Energy

Brazil

PT Bukit Asam

Coal Transportation

Indonesia

ConocoPhillips

Energy

Canada

Bridas

Energy

Argentina

Sinopec

$7,100

40

China Railways

$4,800

10

Sinopec

$4,650

9

CNOOC

$3,100

50

Sinochem

$3,070

40

Peregrino Field

China State Construction Engineering

$2,500

100 financing

Minmetals

$2,500

Country Nigeria

Energy

Brazil

Baha Mar Resort

Real Estate

60

Galeno Project

Metals Copper

Peru

CNOOC

$2,470

30

Pan American

Energy

Argentina

Sinopec

$2,450

100

Occidental

Energy

Argentina

Bahamas

6

Institute for 21st Century Energy

Figure 7. Energy Mix, 200917 Panel A. China Energy Mix

49

Scissors, Derek, 2011, “China Global Investment Tracker: 2011,” The Heritage Foundation.

50

Scissors, Derek, 2011, “China Global Investment Tracker: 2011,” The Heritage Foundation. Wind 1%

Hydro 6%

Panel B. U.S. Energy Mix

Ethanol 0% Solar 0% Geo 0%

Nuclear 1%

Hydro 3% Nuclear 9%

Oil 18%

Ethanol 1% Wind 1% Solar 0% Geo 0%

Oil 38%

Coal 22%

Coal 70%

Natural Gas 26%

Panel C. Rest of the World Energy Mix Hydro 8% Nuclear 6%

Wind 0% Ethanol 0% Solar 0% Geo 0%

Oil 38%

Coal 18% Natural Gas 29%

Natural Gas 4%

Chinese officials say production of gas locked in shale rock could start before the end of 2015, and China reportedly has drilled more than 10 wells and signed cooperation agreements with foreign companies to develop its shale gas resources.

Nuclear: While not now a large producer and consumer of nuclear power, China is poised to become one. It has 13 nuclear plants in operation, and these fill just under 1% of domestic demand. More than 25 nuclear power reactors are in various stages of construction and will add considerably to China’s nuclear generating capacity.

By 2020, the country is expected to increase its nuclear capacity to more than 10 times its current capacity.18 EIA forecasts that nuclear power consumption will increase at an annual rate of more than 8% through 2035. Even then, however, it will only account for about 3% of domestic demand.19 Renewables: China’s consumption of renewable energy is increasing rapidly, but except for hydropower, it is—and is expected to remain—a relatively small share of domestic energy consumption. China is a large hydropower producer. In 2009, hydroelectric power accounted for 17

BP Statistical Review of World Energy, June 2010.

18

Nuclear Power in China, Updated on March 2011, World Nuclear Association.

19

International Energy Outlook 2010, EIA.

more than 6% of China’s total energy consumption, and 19% of the global total.

Non-hydro renewables such as wind, ethanol, solar, and geothermal accounted for much smaller shares (Figure 7, Panel A). As to wind power, China’s use of it exceeds that of other countries and has caught up with the United States, the world’s largest wind power user, but up to a third of its wind capacity is unconnected to its grid. In China (like the United States), the really large wind resources tend to be located at a distance from load centers. China is expanding and upgrading its grid to accommodate more renewable, but this is likely to take many years.

Other renewable energy sources in China are quite small. Although China is one of the top 10 consumers of ethanol and solar energy, its shares of global consumption in 2009 were less than 3% for ethanol and its share of global capacity was a little more than 1% for solar. China’s geothermal capacity is virtually nil (Table 6) China’s clean energy production has increased notably over the past 10 years. From 2000 to 2009, hydroelectric consumption grew more than 176%. Wind and solar renewable energy sources have seen their capacity rise sharply since 2000.

20 // INSTITUTE FOR 21ST CENTURY ENERGY

With an increasing amount of attention on China, the Energy Institute released a report examining its energy consumption patterns. Some have asserted that China has an advantage over the United States in clean energy development, but the Energy Institute’s analysis showed that alternative energy sources account for a negligible share of China’s energy consumption. In fact, China has become an important market for American coal, which has been squeezed by U.S. regulations.

While the Energy Institute’s preference would be for sound policies that are determined in the legislative process, at times it is necessary to stand up for consumers and American energy resources in the courts.

In 2011, through the Chamber’s legal arm, the National Chamber Litigation Center, the Institute entered into 11 new cases, and has a total of 21 pending. Of the seven cases decided in 2011, the Energy Institute’s position prevailed in five of them.

YEAR IN REVIEW 2011 // 21

in focus:

92.7

2010

2009

2010

2009

2010

2009

2010

2009

84.6

89.1

90.5

94.0

97.0

98.0 91.5

2010

Of the 37 metrics, 20 showed increased risk in 2010, 11 showed improvement, and six were unchanged. Eight of the top 10 metrics showing the largest changes in score were related to energy prices, price volatility and expenditures.

2009

The Index of U.S. Energy Security Risk remains the only tool available to quantify America’s energy security, based on 37 separate metrics covering four primary areas – geopolitical, economic, reliability and environmental. For 2010, the most recent year in the Index, the energy security risk index score was 98.0, the fourth highest score since 1970 (higher scores mean more risk).

105.6

The 2011 edition of the Index of U.S. Energy Security Risk featured a multitude of improvements based on feedback received after the launch of the inaugural Index in 2010.

111.0

Index of U.S. Energy Security Risk

The Index of U.S. Energy Security Risk demonstrates that in 2011, America faced a greater risk – largely due to high energy prices and price volatility.

22 // INSTITUTE FOR 21ST CENTURY ENERGY

in focus: Index of U.S. Energy Security Risk

2011 Edition

Institute for 21st Century Energy • U.S. Chamber of Commerce

www.energyxxi.org

The Energy Institute released the 2011 index of U.S. Energy Security Risk on August 4, with a discussion that included Dr. Daniel Yergin.

The Energy Institute presented the Index to a host of organizations including Bipartisan Policy Center, U.S. Association of Energy Economists, World Green Energy Symposium, and the State Department’s Visitor Exchange Program.

Above, Steve Eule discusses the Index of U.S. Energy Security Risk during a panel discussion hosted by the U.S. Association of Energy Economists.

Left, Karen Harbert delivers remarks at the launch event for the Institute’s Index of U.S. Energy Security Risk.

A key component of the Index is an online tool which allows users to see for themselves the components of the risk index score. The online tool is helpful in understanding trends and the impacts that policy decisions have had on our energy security.

YEAR IN REVIEW 2011 // 23

Steve Eule addresses a meeting hosted by the Major Economies Business Forum during the COP17 meetings in Durban, South Africa.

The Major Economies Business Forum on Energy Security and Climate Change was created to give the international business community a voice in the U.N. climate change negotiations.

First convened by the Energy Institute in 2009, the group of nearly 20 international business organizations was actively engaged at the 2011 Climate Change conference in Durban, South Africa.

24 // INSTITUTE FOR 21ST CENTURY ENERGY

The 17th Conference of the Parties (COP17) to the United Nations Framework Convention on Climate Change (UNFCCC) meeting took place in Durban, South Africa.

4

Chapter

EXPANDING OUR REACH

In 2011, the Energy Institute utilized traditional and new forms of media to share our message.

CNBC ran a feature on the Energy Institute’s Five Point Plan launch in February.

Matt Koch was interviewed by Fox News in November.

26 // INSTITUTE FOR 21ST CENTURY ENERGY

Karen Harbert was interviewed live on CNBC’s Sqauwk on the Street in May.

Yoshiki Hidaka, executive producer of The Washington Report, which airs nationally on Japanese television, interviews Christopher Guith about nuclear energy.

The Energy Institute continues to maintain a strong media presence, with officials regularly quoted in national, regional and local media.

YEAR IN REVIEW 2011 // 27

Energy Institute leaders appeared in the media over 200 times, including outlets such as CBS, Fox News, The Wall Street Journal, POLITICO and numerous others.

28 // INSTITUTE FOR 21ST CENTURY ENERGY

One of the missions of the Energy Institute is to educate and then activate the public on behalf of common sense energy policies.

In 2011, the Institute reached over 85,000 activists by email, who in turn contacted Members of Congress and the White House tens of thousands of times to share their views on specific energy issues. The Energy Institute is fully integrated into the U.S. Chamber’s renowned grassroots network, allowing it to help shape the debate in Washington and across the country.

The Energy Institute continued to utilize Facebook and Twitter to communicate to our network of supporters.

YEAR IN REVIEW 2011 // 29

Year in Review 2011

// 29

in focus: Websites

On the digital side, the Institute launched its custom designed new website and a stand-alone site to feature the Partnership to Fuel America.

The Energy Institute’s new website is more user-friendly and allows for the business community, government and the public to better access information about energy issues.

The website is regularly updated with timely information, news from the Energy Institute, and facts about energy in all 50 states.

The Partnership to Fuel America’s website is an important tool to educate the public about the potential of Canadian energy resources. The website features an interactive map of the Keystone XL pipeline route, with state-specific job impact numbers along the way.

EnergyXXI.org

30 // INSTITUTE FOR 21ST CENTURY ENERGY

in focus: Websites

EnergyXXI.org

Fuelingus.org

YEAR IN REVIEW 2011 // 31

2011

Leadership and Staff

Karen Alderman Harbert

Stephen Eule

Christopher Guith

President and CEO

Vice President and Managing Director, Climate and Technology

Vice President and Managing Director, Policy

Matthew Koch

Heath Knakmuhs

Susan Forrester

Vice President and Managing Director

Senior Director, Policy

Director, Advocacy and Outreach

Leila Getto

Matt Letourneau

Alyssa Cherif

Director, Programs

Director, Communications and Media

Manager of Communications, Strategy and Operations

32 // INSTITUTE FOR 21ST CENTURY ENERGY

In Memory of

Fred Smith

Frederick C. Smith was the Energy Institute’s first vice president and a valued colleague and friend. Fred joined the Energy Institute at its beginning, in 2007, and helped guide us as we’ve grown. Prior to joining the Chamber, Fred held a variety of distinguished positions at the Pentagon and in business. In November 2011, Fred lost his battle with cancer that he had so valiantly fought for several years. He will be sorely missed.

YEAR IN REVIEW 2011 // 33

Institute for 21st Century Energy U.S. Chamber of Commerce 1615 H Street, NW Washington, DC 20062 Phone: 202-463-5558 | Fax: 202-887-3457 energyinstitute@uschamber.com www.energyxxi.org

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